To Hire Great Coders, Offer Learning, Not Just Money

From data scientists to web developers to designers, firms are locked in competition for technical talent. You can’t compete with the likes of Google and Facebook without coders, but if you’re not Google or Facebook, it often seems, you can’t afford them.

But there’s a catch, according to a recent working paper by Prasanna Tambe and Xuan Ye of New York University, and Peter Cappelli of Wharton. When it comes to attracting technical talent, salary isn’t all that matters. The better the technology at your company, and the greater the learning opportunity, the better your chances of bringing technical employees on board, and of keeping them.

The researchers looked at the gap between how much IT workers made in their current job and how much they listed as their “target” salary when job searching, using data from Glassdoor.com from between 2006 and 2011. The bigger the difference, the more the workers must value other non-monetary things in their current job. One such non-monetary feature could be the technology used by their current employer.

To identify firms investing in cutting-edge technology, the researchers used data on the spread of Hadoop, software for dealing with large datasets that’s closely associated with the rise of “big data” analytics.

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IT employees at firms using Hadoop listed target salaries on Glassdoor.com almost 2% higher than those at less technically innovative firms. In other words, they required a 2% higher offer from another employer to consider leaving their current job. This result held after accounting for region, industry, occupation, current salary, and even the current employer’s IT investment and R&D budget, among other factors.

“Technical workers demand higher target wages when employed at IT innovators,” the authors conclude, and they think they know why. Workers aren’t just attracted to companies with new technology; they value the opportunity to build their skills. To test this, the researchers looked at company reviews on Glassdoor, and identified reviews where the “pros” included terms related to the opportunity for learning and training. Then they combined this learning opportunity measure with the IT innovator measure and found that “IT workers derive value from early IT adoption only at workplaces where they can learn new skills.” They also document that the employees who most value working for IT innovators are those who previously worked with older technology or who have less formal training – in other words, those who have the most to gain from learning new skills.

It’s no surprise that technical employees value more about their jobs than just salary; we all do. And the researchers draw a parallel to studies that have shown that scientists accept lower salaries in positions where they’re able to publish their findings, because they value scientific reputation.

Nonetheless, the paper offers two useful reminders. First, attracting technical employees is harder if your tech stack is out of date and a company’s case for technology investment should reflect that. Second, and relevant not just for tech workers, employees value learning — to the point where in the aggregate they even seem willing to give up a modest amount of salary for it.

In order to attract talent, technical and otherwise, firms need to offer more than just a competitive salary. They need to outline how employees will learn on the job, and build new and valuable skills that they don’t yet have. There are already many good reasons to focus on developing a learning organization. Chief among them is the ability to retain talent.